# Depreciation MCQs with solved answer

## Depreciation MCQs with solved answer

(1) Depreciation is provided on:
(a) Fictitious Assets

(b) Inventory
(c) Fixed Assets
(d) Intangible Assets

(2) Amortisation refers to writing off:
(a) Tangible Assets

(b) Fictitious Assets
(c) Intangible Assets
(d) Fixed Assets

(3) Allocation of cost of fixed Assets over its useful life is known as:
(a) Depreciation

(b) Amortisation
(c) Monetisation
(d) Accounting

(4) Estimated sale value of an Assets after its working life is called:
(a) Scrap Value

(b) Residual Value
(c) Break-up Value
(d) All of these

(5) Total cost of fixed assets include:
(a) Purchase price of fixed assets

(b) Freight on fixed assets
(c) Installation cost on fixed assets
(d) All of these

Note: Answers are given below at the end.

## Depreciation MCQs with solved answer

(6) Which of the following is the cause of Depreciation:
(a) Constant Use

(b) By Expiry of the time
(c) By Obsodesences
(d) By Accident
(e) All of these

(7) Need of providing Depreciation:
(a) For Ascertaining the True profit and loss

(b) For showing the true and fair view of the financial position
(c) To ascertain the accurate cost of production
(d) To Provide funds for replacement of assets
(e) All of these

(8) Machinery Purchased ₹9,20,000, Freight Paid ₹ 30,000, Installation Expenses ₹2,50,000, Repair charges in 3rd year ₹1,00,000. The cost of machinery will be :
(a) ₹9,20,000

(b) ₹9,50,000
(c) ₹12,00,000
(d) ₹13,00,000

(9) Original cost of an asset is ₹1,90,000, Scrap Value of ₹10,000. The estimated life of an asset is 9 Years. The amount of annual depreciation under straight-line method will be:
(a) ₹20,000

(b) ₹22,222
(c) ₹21,111
(d) None of these

(10) Original Cost of an asset is ₹1,80,000, Installation Expense is ₹20,000, Scrap Value is ₹10,000. The estimated life of assets is 10 years. The rate of depreciation under straight-line method will be:
(a) 9.5%

(b) 10%
(c) 9.55%
(d) 11.11%

Note: Answers are given below at the end.

## Depreciation MCQs with solved answer

(11) The Balance of the machine account on 31st March 2021 is ₹72,900. The machine was purchased on 1st April 2018. Depreciation is charged @ 10% P.A. by diminishing Balance method. The cost price of the machine on 1st April 2018 would be:
(a) ₹1,00,000

(b) ₹1,10,000
(c) ₹1,05,000
(d) ₹1,20,000

(12) Under diminishing Balance method depreciation is charged on ————–of fixed asset.
(a) Original Cost

(b) Market value
(c) Written down value
(d) Scrap value

(13) Under Straight-line method depreciation is charged on ————–of fixed asset.
(a) Original Cost

(b) Market value
(c) Written down value
(d) Scrap value

(14) Under diminishing Balance method amount of depreciation :
(a) Increases every year

(b) Decreases every year
(c) Constant every year
(d) None of these

(15) Under Straight-line method amount of depreciation :
(a) Increases every year

(b) Decreases every year
(c) Constant every year
(d) None of these

Note: Answers are given below at the end.

## Depreciation MCQs with solved answer

16. Original cost = ₹ 12, 60,000. Salvage value = 60,000. Useful Life = 6 years. Annual depreciation under SLM will be:
(a) ₹2,10,000
(b) ₹2,00,000
(c) ₹2,20,000
(d) None of these

17. DHARIWAL Ltd. purchased a machine on 01.01.2019 for ₹ 12,00,000. Installation expenses were ₹ 1,00,000. Residual value after 5 years ₹ 50,000. On 01.07.2021, expenses for repairs were incurred to the extent of ₹ 20,000. Depreciation is provided under straight-line method. Depreciation rate is 10%. Annual Depreciation will be:
(a) ₹1,30,000
(b) ₹1,70,000
(c) ₹2,10,000
(d) ₹2,50,000

18. ₹ 2,00,000 paid as wages for erecting a machine should be debited to:
(a) Wages account.
(b) Machine account.
(c) Repair account.
(d) Furniture account

(19) Depreciation is not charged on:
(a) Land and Building

(b) Plant and Machinery
(c) Furniture
(d) Goods

(20) Which of the following assets is usually assumed to be not depreciating?
(a) Land

(b) Machinery
(c) Furniture
(d) Building

Note: Answers are given below at the end.

ISC Commerce 12 Planning MCQs with Solved Answers

## Depreciation MCQs with solved answer

(21) In which of the following methods, the cost of the asset is not spread over in equal?
(a) Written down value method

(b) Straight Line method
(c) Both (a) and (b)
(d) None of these

(22) Which of the following statements is/are false:
i.) Provision for depreciation A/c is debited when provision for Depreciation A/c is created

ii.) Depreciation is a non-cash charge i.e. no cash goes out of business, thus it is credited to Profit & Loss A/c
iii.) The term ‘depreciation’, ‘depletion’, ‘amortization’ convey the same meaning
(a) Only (i)
(b) Only (ii) above
(c) Only (iii) above
(d) All of the above

(23) Which of the following is not true with regard to fixed assets:
(a) Depreciation at specified rates is to be changed on most of the fixed assets

(b) They always give profit on sale
(c) They are acquired for use over a long period of time
(d) They are not meant for resale to earn profit

(24) Which of the following expenses is not included in the acquisition cost of a plant and equipment:
(a) Installation Cost

(b) Freight & transportation charges
(c) Interest Paid on loan taken for purchase of Plant & Machinery
(d) Cost of site preparation

(25) TARA Ltd. purchased a machine on 01.01.2003 for ₹1,00,000. Installation expenses were ₹20,000. On 01.07.2003, expenses for repair were incurred to the extent of ₹20,000. Depreciation is provided @10% p.a. under written down value method. Depreciation for the 3rd year will be:
(a) ₹9,720

(b) ₹12,000
(c) ₹10,800
(d) ₹8,748

## ISC COMMERCE 12 Concept and Nature of Management MCQs with solved answers

(1) (c) Fixed Assets

(2) (c) Intangible Assets

(3) (a) Depreciation

(4) (d) All of these

(5) (d) All of these

(6) (e) All of these

(7) (e) All of these

(8) (c) ₹12,00,000

(₹9,20,000+₹ 30,000+₹2,50,000=₹12,00,000)

(9) (a) ₹20,000

( ₹1,90,000- ₹10,000)/9= ₹20,000

(10) (a) 9.5%

Amount of Depreciation= (1,80,000+20,000-10,000)/10

Rate of Depreciation-19,000X100/2,00,000=9.5%

(11) (a) ₹1,00,000

(12) (c) Written down value

(13) (a) Original Cost

(14) (b) Decreases every year

(15) (c) Constant every year

(16)(b) ₹2,00,000

(17) (a) ₹1,30,000

(18) (b) Machine account.

(19) (d) Goods

(20)(a) Land

(21)(a) Written down value method

(22) (d) All of the above

(23) (b) They always give profit on sale

(24) (c) Interest Paid on loan taken for purchase of Plant & Machinery

(25)(a) ₹9,720